While I have covered international retirement destinations as diverse as San Miguel de Allende, Mexico, small towns in Panama, Hua Hin, Thailand, and the east coast of Italy, one of the subjects that I have not mentioned is the need to consider fluctuations in the exchange rates when you investigate where you can afford to live.
It recently came to my attention that many people from the United Kingdom who retired to France, Spain and Greece about a decade ago are moving back to their homeland because the pound has weakened dramatically against the Euro.
One of the articles I read about the British ex-pats who are wanting to return home said that 39% of Brits in Greece and 34% of those in Spain are trying to sell their properties, often at a large loss, because property values have dropped in both of these countries, as well as in France.
Of course, lower property values are not a concern for ex-patriots who are extremely wealthy, which I discovered when I read a blog post on ExpatForum.com about the situation in Spain. While ex-pats in some areas are suffering, those living in the more affluent areas of Europe seem to be doing just fine.
While the largest issues I found involved citizens of the United Kingdom who moved to the continent of Europe 10 to 12 years ago, Americans need to think about this risk as well if they decide to move to another country. It is important for ex-patriots to leave some room in their budget for fluctuations in the currency.
For example, if you and your spouse have a combined income from Social Security of $2500 to $3000 a month (about average) and you plan a lifestyle that requires you to use all of it every month, what happens if the exchange rate fluctuates even a modest 10 percent? Would you be able to stay in your new country, or would you have to pack up and return to the United States? Do you have enough savings to weather a temporary fluctuation?
Of course, fluctuations in the exchange rate can go the other way, too. It is possible that there will be some years when the dollar will rise against foreign currencies and you will find that you can indulge yourself a little, eat out more frequently, and travel occasionally because the exchange rate is working in your favor. The problem is that there is no way to predict the future.
Bottom line: If you want to insure yourself of a comfortable retirement in another country, make sure you leave room in your budget for monetary fluctuations and put aside a little nest egg to get you through the tough times. At the very least, you will retire overseas with a bit more peace of mind.
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